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Sunday, October 18, 2015

Medicaid Spousal Impoverishment Protection Standards for 2016

The cost of care in a nursing home can devastate the lifetime
savings of elderly couples. In 1988, Congress passed a law intended to prevent the
"spousal impoverishment" that can result when one spouse becomes a
nursing home resident.

Under this Medicaid law, minimum amounts of resources and
income are protected for a spouse who is still living in the community. These protected
amounts are adjusted each year to account for inflation.

The Federal Government has published the consumer price
index for all urban consumers, all items, U.S. city average (the CPI-U) for the
month of September 2015. Using these figures it is possible to project
Medicaid's 2016 Community Spouse minimum and maximum resource allowance and maximum
income allowance for 2016.

What are Community Spouse Resource and Income Allowances?

In general, when your spouse is in a nursing home or needs assistance with home
care under a Medicaid Waiver program (like Pennsylvania’s Aging Waiver program) he or she will not qualify
for Medicaid benefits until your combined financial resources are reduced to a
certain level. That permitted level of so-called “available resources” varies
depending on your financial circumstances.

For nursing facility residents, the general rule is that the community spouse
can keep ½ of the amount of available resources that were owned by the couple
on the date of admission to the nursing facility. However, this standard
protected “Community Spouse Resource Allowance” is subject to a ceiling and a
floor. The ceiling and floor amounts for 2015 and 2016 are set out below.

In addition to being allowed to keep the resource allowance, the community
spouse is also entitled to have a certain level of income called the Monthly
Maintenance Needs Allowance. This income allowance is also subject to a ceiling
and a floor. If the community spouse does not have the required level of
income, that spouse may be allowed to keep some of the institutional spouse’s
income. If the income diverted from the institutionalized spouse is still
insufficient, the community spouse may be able to keep additional resources.

What are the Resource and Income Allowances for 2016?

These community spouse resource and income allowances are usually adjusted
annually. But it appears that this year will be an exception.

Although the 2016 figures have not yet been formally announced by the
Centers for Medicare and Medicaid Services (CMS), by law they are based on the
consumer price index for all urban consumers published by the Bureau of Labor
Statistics (the CPI-U) for September of the prior year. The CPI-U for September of 2015 has now been
released.

In 1988, the Medicaid law established the initial community spouse
resource allowance at levels of $12,000 minimum and $60,000 maximum for 1989
based on the CPI-U for September 1988. The initial maximum income allowance was
set at $1,500. The law provides that these levels be increased by the same
percentage as the percentage increase in the CPI-U between September 1988 and
the September before the calendar year involved.

The 2015 Allowances

The CPI-U for September 1988 was 119.8. The CPI-U for last year (September 2014)
was 238.031. This meant that the CPI-U had increased 98.6903% over the period.
For calculation purposes, you can round the percentage to 98.7%. This gave us
the figures to use in 2015 which were:

Minimum Community Spouse Resource Allowance = $23,844.

Maximum Community Spouse Resource
Allowance = $119,220.*

Maximum Community Spouse Monthly Income
Allowance = $2,980.50.

The
2016 Allowances

Largely as a result of declining energy prices the past year has experienced very low
inflation. The CPI-U
actually fell slightly during the year. As noted above, the CPI-U in September
2014 was 238.031. The CPI-U in September 2015 declined to 237.945.

This has happened in the past. In September of both 2009 and
2010 the CPI-U was below the index figure for September 2008. When that happened, the
government continued to use the higher spousal impoverishment figures rather than adjusting them
downward. It is probably safe to assume the same will happen in 2016. Thus, the spousal protection allowance figures in 2016
should be as follows:

Minimum Community Spouse Resource
Allowance = $23,844.

Maximum Community Spouse Resource Allowance = $119,220.*

Maximum Community Spouse Monthly Income Allowance = $2,980.50. (Note: The Minimum Monthly Income Allowance remains at $1,966.25 –
it will be adjusted on July 1, 2016. The income allowances are higher for
residents of Hawaii and Alaska.)

Readers should understand that the
Community Spouse Resource Allowance is a starting point for planning. A
community spouse can typically protect resources far in excess of his or her
resource allowance through Medicaid planning techniques such as the purchase of
a Medicaid
qualified annuity. (Be sure to consult an experienced elder law
attorney before purchasing an annuity for purposes of qualification for
Medicaid benefits.)

The allowances discussed in this post can be calculated from the September
CPI-U. But they have not yet been formally announced by the Centers for
Medicare and Medicaid Services (CMS). It is possible that CMS could ultimately
announce figures that are slightly different than those above. But my
projections have been correct in the past and I have a high degree of
confidence in them.

Thanks to my friend and fellow elder law attorney Robert Clofine
of York, Pennsylvania, for being first to calculate these 2016 inflation
adjusted figures. And thanks to Ken Coughlin of ElderLawAnswers for providing me
with information about prior years when the CPI-U fell.

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About Me

I am a Pennsylvania lawyer with over 35 years experience in estate planning and elder law. I was selected by US News Best Lawyers® as its Lawyer of the Year in Elder Law for 2014 for the Harrisburg, Pennsylvania metropolitan region.
I am of counsel to Marshall, Parker and Weber, a law firm which has offices in Williamsport, Jersey Shore, Wilkes-Barre and Scranton, Pennsylvania. I am past President and a founder of PAELA (the Pennsylvania Association of Elder Law Attorneys). However, the views expressed on this site are my own and not those of PAELA or of Marshall, Parker and Weber.
Most importantly I am a husband, father and grandfather.